INTRODUCTION
The green or red of the candlestick is called "THE BODY". It is also referred to as "REAL BODY" The long thin line above and below the body represent the high/low range.
They are called "SHADOW" also they are referred to as wick and tail, the upper shadow is the
wick while the lower one is the
tail.
The high is marked by the top of the upper shadow and the low by the bottom of the body represent the
opening price and the top of the body representing the
closing price.
If the stock closes lower that it opening price, a
red candlestick will be formed with the top of the body representing the opening price and the bottom of the body representing the closing price.
EXPLANATION
This candlestick as it can be seen on
poloniex.com or
btc-e.com is more visual and easier to interpret compared to the tradition bar charts. Once a trader can compare the relationship between the open and close of the candlestick, it will be very easy to predict the market direction and know when to buy or when to sell.
GREEN CANDLESTICK: for a green candlestick to form, the close is greater than the open, which indicate the buying pressure. A
long green candlestick show strong buying pressure. The longer the green candlestick is, the further above the open is. This indicates that the price advanced significantly from open to close and buyer were aggressive.
After extended decline {down trend series of red candle or a very long red candle going down}, long green can mark a potential turning point or
resistance. If buying get aggressive after a long advance {up trend candle going up}, it can lead to excessive
bullishness.
RED CANDLESTICK: for a red candle to form, the close is less than the open, indicating
selling pressure. Long Red Candlestick show strong selling pressure. The longer the red candlestick is, the further the close is blow to the open. This indicates that prices declined significantly from open and seller were aggressive.
After a long advance {long green candle or up trend}, a long red candlestick can foreshadow a turning point or mark a future support. After a long decline a long red candlestick can indicate panic.
Long and Short Bodies
Generally speaking the longer the body is, the more intense the buying or selling pressure.
Long and Short Shadows
The upper and lower shadow on candlestick provide valuable information about the trading session. Upper shadow indicate the session is high and lower shadow indicate the session low.
Candlestick with short shadow indicate that most of the trading action was confined near the open and close. Candlestick with long shadow show that price extended well past the open and close.
